>> hello and welcome to "daybreak: asia." next two hours, we will bring you the news you need to know as markets open across asia. >> our top story this wednesday receives a vote of confidence, leaving britain in paralysis. relations with europe have been dividing the nation and its political class.

the prime minister will now hold party.s about the downing street says she does not believe her deal is dead. >> let's get you started with a quick check of our market close this tuesday. we saw a broad rift on sentiment across the board as we saw tech stocks rally. the nasdaq gaining 1.7%. the dow also reversed two sessions of losses and the s&p 500 rose the most in a week, pushing through that 2600 level, which it had failed to breach three times last week. but of course, today was all about brexit. we had our eyes on sterling, which declined more than 1% but is now paring back those declines. u.k. prime minister theresa may brexitiling to pass her deal through parliament. that giving rise to speculation that we could potentially see a softer brexit.

we also saw the euro dropping a little bit after we saw some week data out of europe and ecb president mario draghi talking about weak growth and concerns. .25% despiteining the fact that we saw some weaker economic data out of the u.s. the empire manufacturing survey all again. the japanese yen holding steady. keep an eye out for those machine orders and ppi numbers coming out of japan this morning. >> we're still digesting that ate the took place westminster in the past two and of ours. theresa may not think her brexit deal is dead, despite that landslide loss in parliament with the prospect of a

confidence vote later wednesday. in a first vote addressed to the commons, may struck a defiant tone. >> it is clear the house does not want this deal but tonight's vote tells us nothing about what it does support, nothing about how or even if it intends to honor the decision the british people took in a referendum parliament decided to hold. >> let's get straight to london where our reporter joins us live. this report nearly increases the feeling of political paralysis. what's going to happen in the ? xt few days >> this is brought up by opposition, but chances that she loses are very slim. on now a path to try to

reset march 29 deadline before they leave the european union. there's a chance she could try to extend article 50, which would mean more time for negotiation. once the u.k. decides to bring this up, the 27 nations with the european union also have to thee, but she goes back to drawing board with the european union, who are now coming back and saying this is a horrific vote and they do not want to go back to the negotiating table, especially when they do not know parliament members want. the one thing that was clear in this vote was that very few members of parliament wanted mrs. day a posh -- mrs. may's deal. >> without the pound would really take a beating, but instead, we saw the pound gain ground. what happened? >> we saw them really clawback

those losses and really rise. part of this is because may announced she is willing to go across party lines. she wants to work with labour and other members of parliament, not just the tories for a deal. i think it also shows how much of the bad news was already priced in. we went into this vote knowing that chances were very slim for her deal to get through. the pound positive against the u.s. dollar and also against europe. whatt you to look at analysts are saying. bloomberg surveyed 11 banks, and they are showing that the best be 1:35, and would that's if we had a second referendum. what they think the worst case scenario will be -- they are saying the worst case scenario would be if we had a no deal exit, if the european union without -- if the u.k. were to

leave the european union without striking a deal. the u.k. labour party is calling for a no-confidence vote. the next step could be that general electric -- general election. the most strength would be a second referendum. one thing is clear -- after we get through that no-confidence vote tomorrow, anything could happen. it's not clear which direction the u.k. is taking up this point. >> thank you so much for that breakdown. let's bring in bridge capital's cio. we were just hearing how difficult it will be to deal with the brexit process. what are your expectations on ? ere the pound goes from here >> i concur with what and murray has said -- with what ann marie

has said. she has to form a consensus and reach across to the labour party. the only problem i see is she will lose some support from the tory party issue reaches across to the labour party. the very obvious because dup and even ardent remainders have said they will support the government, but if she makes the mistake of going and forming some new labor agreement, i think she might lose the support of the tories. u.k. will leave with the deal and eu has to make their move. why not put a date on that or

get rid of it? right now, it comes back to eu. as things stand, u.k. is going to leave with a no-deal scenario and that will be really bad for the eu. the economic situation is not good at all, so that is not something they can afford. you saw some statements today saying they have to open the dossier again and have this new conversation, so i think that is what will happen. >> of course, we already heard from president mario draghi talking about the weaker economy in the eurozone. does this mean that it will really be a wait-and-see mode, not only for the ecb, but also for the boe, given the protracted uncertainty right now? >> that is true. given the range of the sterling dollar you just saw on the

screen, i do agree with that. if you look at by comparison, eurozone data is weak and germany is onand the verge of recession. in germany, you see what it means for the whole eurozone because they get hit twice. they have something to bear in mind. data in the u.k. has gotten better, but it is not good. you still have the uncertainty of a no deal scenario and there is a price to pay. it keeps sterling in the range it is. my view is going by what i expect there will be a deal. i expect sterling to trade around 1.32 by june. in now, it will get stuck

this range. that no dealows does not help at all. ng a lid on keepi inflation. does that change expectations for the bank of england in terms of quantitative easing? not entirely sure. what we it depends on in the middle of. we are not seeing inflationary pressure. look at the data in the u.s. u.s. data is slowing down. they are making higher credit cardor losses. bank of england can be pleased with where they are and they

don't really have to worry about it. i do not see a case of sterling where it is going to rally or go down because we are just not there where you can trade in a very convincing manner. you saw what happened today. sterling took a dip, and things realigned and got that, so i think you will stay in this range. >> i want to throw out this chart, which really kind of supports the view at least in terms of the data we got last year. the area economy broadly taking a look through the prism of french and german eurozone composite, we were just talking sinceit has been a week german output, does that give the eu more impetus to reach a deal for a soft brexit with the

u.k.? disorderly, chaotic brexit is only going to make it harder. >> absolutely. i could not agree more and that has been my base case scenario. if you look at the reality of where things are and, as i put in my note, i am really more concerned about france. italy has its problems with high debt to gdp, but its debt to gdp became worse in 1995 and since then has become only slightly worse. they have done a much better job of managing deficit than france has. france has been continuously accumulating debt. with what happens with the president does not have control over his own policy and has to but thend spend,

china-u.s. discussion is still going on, so that's not really a good place to be. to bear in mind, everyone talks about growth and recovery. i don't see any recovery. from 2014 to 2017, when they had growth, it was a negative interest rate and they had qe policy. the problems persist. they have no solution. -- the u.s. has far more to lose and think about. >> great to have you. about trade,more the other elephant in the room, but in the meantime, let's look

at how asian markets are shaping up in terms of any kind of reaction we're expecting to see with the developments or lack of developments when it comes to brexit. >> as investors digest the latest of elements around brexit, we could see the rally in asia stall after the benchmark rose to a nearly six-week high on tuesday. in sydney, we are seeing little change. a u.k. trading partner keeping a .lose eye on the eco-lineup, we will get data fromcer price japan along with machinery orders in from china. we will be getting new home at 9:30 a.m. hong kong time. aussie dollar looking steady, head of consumer confidence data at the bottom of the hour.

it has rallied about 1.4% this year, which is spurring some calls for a correction. sterling trading just above 1.28 after reversing overnight losses and volatility picks up and the one-week oil.t a quick check now on brent continuing to climb above 60. the chinese throwing everything they can at their economy. >> thank you so much. let's get to first word news with paul allen. >> jpmorgan boss jamie dimon warning the record government shutdown could drive u.s. growth 20. he said companies are increasingly worried about the funding dispute of washington as arguments over president trump's

border wall keep services close. the shutdown will shave more so much. let's getthan 1% of growth everk according to sources. sources say renault is ready to remove carlos ghosn as ceo after he failed at his latest appeal for bail in tokyo. he has been in jail for eight weeks, accused of financial misconduct. renault directors are expected to meet in the coming days and some reports say he will be replaced as chief executive, regardless of the case against him. founder of chinese tech company huawei has broken a years long silence to dismiss allegations that it has helped companies spy . the company ceo denied official espionage saying he has no regular contact with the government. global news 24 hours a day on

air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm hall alan. this is bloomberg. >> still ahead, more of the fallout from theresa may's landslide brexit dispute. >> this is bloomberg. ♪ berg. ♪

>> the government of china increasingly turning to tax cuts as a first line of defense against a slowing economy. correspondent tom mackenzie joining us from beijing. they are focusing on tax cuts, even more than, say, the pboc's monetary easing.

why is the focus here on fiscal stimulus instead? to be the government in china is concerned about not wanting to go back to that debt-fueled infrastructure spending. they want to hold the line on financial risks. that seems to be pretty clear, so this new playbook is focused on tax cuts. largely in last six months or so, i will just recap some of those. had sectors including manufacturing, and telecom. incomee had a personal tax-cut and a promise from the state council to cut about $30 billion, and that was before what we heard from the pboc and the finance minister yesterday. when they said larger tax cuts were in the offing, details around that still to be seen,

but jpmorgan says the totality of these tax cuts could come to about $300 billion, which is about 1.2% of gdp. they think it will be pretty substantial in terms of shoring up the economy amid this week data we have been seeing. it takes longer for these kind of tax cuts to feed through and there's questions about how much of an impact it will have. the focus is on shoring up the consumer and private this misses. you also talked about the credit environment. few questions around it, but it comes despite the and as, in fact, i should say that china banking continues to be squeezed, so they do seem to be striking something of a balance in terms of liquidity while maintaining those financial risks and that is the focus. again, tax cut ties into that. >> the latest overtures from the

to try to shore up, pretty dismal set of trade numbers we've had. thanks for sticking around. growth, that's a level that a lot of us would be envious of. >> that is absolutely true. there's nothing to sneer about, but if you look at the u.s.-china treaty, i think it .ould happen china wants a deal. deal, buts. once a also you have an election cycle coming down the line. as president trump would like to getreelected, you cannot reelected if you have a

recession or your unemployment rate grows. negotiation so far, people have been skeptical about if there , butbe an agreement or not the increase is going to continue. that there will not be any slippage. is feedback we are getting that both sides are making good progress, so i believe it benefits both sides and things happen where both sides will benefit, not just one side, so i put a very high premium that you will see a deal being struck in time. >> i think you are not the only one who expects a deal because we have seen analysts up their forecast for the chinese yuan. forecasts have been for a stronger chinese yuan>> i thinke

current levels. we have seen goldman sachs also upping their forecast to around 6.8. does that mean that yuan weakness could potentially be behind us? >> i would think so. expect the u.s. will be increasing rates. listening to there might be a rate cut in december, i disagree with that. growing atate still around 3%. if you have a good china-u.s. trade deal, that gives a boost to the economy. suddenly, the fed will be looking at how to get back and get one more rate hike. i still believe that again, you will see that lead to some yuan weakness. sixably if you look at months out from now, we get to

in the yuan weaker, but short-term over the next three months to six months, i think the one can get mildly stronger. >> what about chinese equities back on does the government need to step in and by chinese equities? is anything going to stop shanghai shenzhen shares from languishing the way we ended last year? the problem is foreign investors are just not interested and domestic investors, if you look at turnover, are feeling pretty .own about it as well >> that is true. it's the fact that you do not have large participation from foreign investors in domestic chinese equities. emerging-market, but i buying alibaba or baidu or tencent, the ones that have .istings in different markets

i think i will take time to change. of course, being included in the indices is going to help and you have chinese managers getting in , but forg more of that a lot of people playing at a global level, you have to by .hinese stocks it's just going to be a continuing story. should the government by? they have tried to do that and they have used that lever in the past. i do not think they will stop doing that. they will step in and buy just to give the confidence, but that is more a political decision for them. >> we have about 30 seconds. it seems there's a consensus for u.s. dollar weakness going forward. bes that mean that it could a more positive environment for

emerging markets this year? >> i absolutely agree with that. i do not see any rate price scenario or expectations for the next three to six months, and any deal that happens between the u.s. and china, which i think will happen, will be again useful. if you look at the chart, the price-to-book ratio trading at quite a low. we have seen some bounce, but that is set to continue. it will be a good time to buy emerging market at and i would say bonds as well. .> thank you so much that was cross bridge capital's cio. we are seeing asian markets gaining a little bit of ground after the positive sentiment coming from wall street as we saw those gains across the board with the s&p 500 gaining the most in about a week. this is bloomberg.

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paul: you are watching daybreak asia. i'm paul allen. theresa may is saying cross party talks on her brexit deal after suffering a historic defeat in the house of commons. 32-202, the worst result in more than 100 years. the opposition labor party immediately called a vote of no-confidence little take place later on wednesday. the u.k. is facing paralysis over a decision that is dividing the nation and political class for decade. >> it is clear that the house does not support this deal, but tonight's vote tells us nothing about what it does support. nothingabout how --

about how or even if it intends to honor the decision the british people took in a referendum parliament decided to hold. >> now it is time for the u.k. we will remain united. paul: the french president has launched his great debate on reform, trying to give in to his critics use not an out of touch elitist. however, he stumbled at the beginning, accusing some poor people of simply messing about. he often talks with leaders of the so-called yellowjacket movement after widespread protests that have dragged on for two months. the european parliament is celebrating 20 years with a common currency. the euro is used by 19 of the european union member states and was introduced in january 1999. among those marking the occasion, the former chief,

mario draghi and the eu commission president. indonesia posted its worst trade deficit on record last year, despite a trade war and a slump in the currency. debt was over $1 billion in december. 1975er shortfall since when the bureau first released data. the emerging markets saw it fall to a two decade low against the dollar. world that is climbing at a 234 trillion, more than three times the size of the global economy. the institute of financial says it exceeded 318% of the third quarter of last year. a fraction below the record of 320% seen in the same period of 2016. the financial sector debt rose to $60 trillion, up 10% in a decade.

global news 20 were hours a day on air and on twitter, powered by more than 2700 journalists and analysts. i'm paul allen. this is bloomberg. haidi: thank you. we are seeing asian stocks of the highest level in over five weeks. for a check on what is happening now, how does the markets look? >> the rally could be stalling for asian stocks. taking a look at the mood in sydney. a little change this morning, making tepid movements after rising on tuesday. utilities and real estate, while tech and financials are gaining ground. the aussie-dollar around 72. bonds are keeping steady, not getting much reaction from the survey of australia's confidence which fell 4.7% on a monthly basis. a quick check on some stock movers in sydney. you have austril climbing back from some of tuesday's decline when it fell 200% -- 500%.

gtv under pressure this morning. it announced it will sell a 50% stake of its center in sydney, but plans to reinvest into its redevelopment pipeline. regis resources leading the decline among gold miners in sydney, as gold is not shaking up the worst year since 2013. haidi: sophie on the markets. the chief financial officer is leaving after eight months of taking the job. the latest in a number of executive departures in late trade. shery: sarah frier covers snap for bloomberg. what prompted stone to quit? sarah: the company is not saying exactly what prompted him to quit. they are saying what it is not about. i have this memo from evan spiegel right now to his employees. he says tim's transition is not related to any of his agreements with any manner relating to our

accounting strategy, managing operations, policies, and regulatory matters, or practices financial or otherwise. basically, he is making all the regulatory commentary he needs to make to not scare shareholders. however, they are spooked. down more than 8%. shery: not surprising given we have seen snap with executive departures. where does the company stand out with its leadership? sarah: the company lost a number of folks since the 2017 ipo, including engineering, products, lega, financial, of course, accounting, communications -- most of the people that report to evan spiegel have left or have been fired and that raises a lot of questions around his company's future because they need to show they can do some sort of consistent level of performance, that there is

some predictability to what they will be able to achieve. they are a public company now. be aslearly not going to stable as wall street hopes it will be. haidi: we see that deterioration in confidence ever since the ipo in march 2017. the stock price tells the whole story. how are they going to try to reverse that? sarah: evan spiegel has said he wants to make sure the company can deliver its users something different than what his competitors have done. that they are going to be focusing on content, separate that content from the user communication experience. it has not gone so well. a redesigned last year and the beginning of the year caused a lot of user deflections and concerns. now through the last couple of quarters, snap had declined in its user base. it is really concerning. they preannounced some positive aspects of their earnings, but when it comes to that report in

february, analysts are really going to be looking at the daily active user count and whether there is any hope for that number to go up because that is what advertisers care about long-term. haidi: sarah frier, bloomberg tech reporter covering snap, joining us from san francisco with the news of the cfo's resignation. the earnings season for wall street rolls on. jpmorgan and wells fargo have come out with earnings and both disappointing. shery: ramy as the details. we saw citibank showing double-digit fall and now jpmorgan with similar results. ramy: take a look at jpmorgan's fourth-quarter results. pretty much across the board, there was misses. etf, fixed trading revenue, investment banking revenue, adjusted revenue. we can see the estimate was higher than the actual, most important, the fixed rating revenue was down 18%. you just mentioned citibank.

citibank said it came in around midteens, if you take out the hit from that asian hedge fund, about $180 million to. the equities revenue was what was met. even jamie dimon give a shout out to the equities team because they are usually over shadowed by fixed, but coming in a plus 15%. apparently the folks there are going to be seeing some extra bonuses. some good news for them. over to wells fargo, one of the most disappointing things, we saw the share price fall line 1.5% or so today. one of the biggest things is that wells was hoping that asset cap the feds put it in 2017 would be taken up by the first half of this year. it turns out, as tim stone is saying, it will be the end of 2019 and a lot of folks are pretty dismayed on that. the asset cap will actually be a multicore issue so it might even

be beyond what they are talking about to the end of this year. on the board one more time because if we compare wells fargo and jpmorgan, who just reported, for the year of 2018, wells fargo is the only bank that is saying they will see an annual revenue drop versus citigroup as well as jpmorgan. risks,looking at the jamie dimon a lot to say with a lot of the stories. the trade war, the possible shutdown. how this is playing into the economy and their profits. ramy: basically connecting all of the dots. i will show you how jpmorgan actually ended the day, despite all the negativity from those numbers. it turned out that the share price started in the red and ended in the green, but this was on just general optimism. more to your point on the fears -- the u.s.-china trade war was

central in his remarks on that earnings call. he said that he is pretty optimistic. take a listen. along to this march 1 end line date that enough would be done to get an extension and hopefully complete the deal. ramy: also, one of the things the u.s. government shutdown. he is saying it is more of a political issue, but says if it is prolonged enough, he might see the u.s. economic growth could go down to zero which would be very disheartening for everyone here. the cfo marianne lake said the more prolonged it is, the more its customers are being impacted. let's pull this out from the financials and look ahead to the rest of the earnings season. flip of the board and you can see at least going into the fourth quarter that the eps revisions are going in a way that a lot of investors don't want it to be going. financials has already been downgraded by a little bit more than 3%. real estate and energy down a

little more, but basically across the board. aside from industrials at the number two position, number one for materials. we can see everything else is going just the opposite way. we will keep a look at what is happening here. tomorrow, we will take a look at what is happening with goldman sachs, as well as with bank of america. finally, one flip of the screen because we could see bank of america, goldman sachs. blackrock and morgan stanley on tap. haidi: ramy with us. coming up next, more on brexit. decision theresa may's with a professor joining us with his views. this is bloomberg. ♪

theresa may is reeling from the worst u.k. government

defeat in more than 100 years. her brexit deal failed by 230 votes, a margin far worse than most cap are seen. haidi: let's take a look at the implications. we are joined by a professor of global affairs from the john hopkins school of advanced international studies. where do we go from here? she does not believe the deal is dead. she will reach across the aisle to get more support, but is it inevitable we will kick this can down the road and extent because it is too close for comfort at the moment? >> it looks increasingly likely simply because it is not clear there is a winning majority for any brexit deal in the u.k. parliament right now. game plan has been knowing she will lose this vote but hoping she would lose by a narrow enough margin where she can go back to brussels and say that with another couple of relatively modest concessions, she can get the deal over the finish line but that is completely out the window at this point given the size of her

defeat. haidi: she even set herself today pretty succinctly that the brutal defeat shows what they don't want. she does not know what politicians on the other side want at the moment. hal: yeah, that is exactly right. there is some level of support for the extremes, but it appears the majority of members of parliament simply don't support this brexit deal, or don't support any of the realistic alternatives as well, which is why you are hearing more and more discussion of ways to potentially going around the parliamentary deadlock you thereby delaying the implementation of article 50 or by going back for a second people spoke. shery: will the defeat act as leverage in negotiations with the european union, or does the magnitude of the defeat really make brussels less inclined to actually get in some more concessions? hal: i think it is the latter rather than the former. i think brussels was always

disinclined to make additional concessions to the u.k. because brussels have to look after its broader reputation and its broader credibility as a trade negotiator. here, it is not even clear what concessions the eu could make that would get may across the finish line or would get a deal that looks anything like this one across the finish line. it is not what the point of additional concessions would be. shery: regardless of what happens with this brexit negotiation, it seems like the relationship with eu and the u.s. is starting to worsen. what does this do to the grand strategy for the u.k. when it comes to their political strategy, diplomatic strategy towards the world? hal: since world war ii, the u.k. has pursued a strategy to maximize british influence, even as british power has declined. the u.k. has done this by cultivating two special but differ relationships -- one with the united states and one with the eu.

at their best, these relationships were mutually reinforcing. the u.k. got influence in brussels because it was a european country that you were closely with the united states and it got extra influence in washington because it could act as a moderating influence on european behavior. both of these relationships are now falling apart. the eu time is obviously falling apart as a result of british choice. but the u.s.-u.k. special relationship has been devalued, in part because the brits are not able to contribute to american security interest as much as they were. in part, because the trump administration has taken a fairly predatory line towards exploiting british weakness as a result of brexit. haidi: let's move to the other aspects in which global diplomacy has fractured. let's talk about the china trade situation. even a year ago, there was some optimism by certain analysts and

pundits that we are looking at a new champion of a western-style love democracy. i think naivety has been pretty destroyed by now. is it the new normal that we had many years of strategic confrontation and competition between china and the u.s. -- what does that look like in terms of are we going to get a functioning global economy out of that at the same time? hal: it is certainly going to make management of the global economy more difficult, particularly if there is another global financial or economic crisis of the sort that we had in 2008-2009. i think one of the things that made the effects of that crisis as limited as they were where the fact you have the united states and china pursuing essentially complementary stimulus and management policies. but today, or 10 years from now, the next time there is a global financial crisis, there is going to be a much sharper geopolitical dimension of rivalry to that crisis and both the united states and china will

be thinking about whether the opponent is going to get more advantage out of some solution or another. that will make it harder to coordinate the type of global action one might need. shery: does the trump administration, i guess, reticent or increasing isolation of itself in terms of america as a great superpower, being able to balance different powers around the region, does that increase the likelihood we will see china shifting without power balance? hal: this is the great missed opportunity of the trump administration. the trumpet administration deserves quite a bit of credit for speaking more candidly about the economic and geopolitical challenges china poses to the united states and the world the united states has tried to build. it has squandered enormous leverage in dealing with china by alienating itself from america's other democratic allies and partners in the process.

the example that is most telling here is the question of how one best exercises economic influence over china. the best approach would be taking a broad multilateral front involving allies and the asia-pacific but the trump administration has picked trade fights with all of his allies as well. shery: hold on for a second because we are getting breaking numbers from japan. we are getting the core machine orders month-to-month staying flat. no gains or fall for the month of november. the expectation was for a gain 7.3%, slowing down from 7.6% gains. this really missing estimates. no gains, no falls, just let. machine orders year on year gaining .8% on a year basis, beating expectations it would rise only .2%, but still a significant slowdown from the month of october. reflect ofrobably

the slowing in chinese demand. chinese import slowing down in the month of november to 3% and even falling and contracting in december by more than 7%. not to mention the recent strength of the yen could have waned on exporters. haidi: it goes behind the idea of spirits deteriorating. if you look at this as a read on and the willingness of chinese companies to spend. the number shrinking. we are also awaiting for inflation to come through as well. those numbers should be dropping shortly. we are expecting to see moderation when it comes to inflation on year-over-year basis. while we await that, let's get back to our conversation with hal brands, professor at johns hopkins university. thank you for sticking around and bearing with us. just picking up on your last point, is there any chance we could see every joining of the -- with the u.s.

facing a single person has said that is not one of the best strategies to encounter an ambitious china. hal: i think there is very little chance under this president simply because getting out of tpp was so central to trump's campaign platform. as the president's political bases narrowed and his legal troubles have intensified, he has tended to double down on his more inflammatory campaign promises and campaign rhetoric. it is unlikely under a trump and administration. i think it is fairly likely under a successor administration, assuming that trump is defeated in 2020. the question is what sort of deal the united states will be coming back into. the terms of tpp 11 are not as favorable to the united states as the terms of the original tpp were. if the united states had not been at the table, so it has not been able to shake the outcome. whatever agreement the united states comes back into two years from now or five or six years from now probably will not be as

favorable to american interests as the original one would have been. shery: the tpp was an element in containing the economic influence of china. we see the china-u.s. tensions continue to develop. we are seeing more debate on whether or not this could be another cold war. is this analogy a dangerous one? hal: in some ways, it is misleading simply because china is not a revolutionary power in the same way the soviet union was. it does not have an ideological compulsion to spread communism around the globe. china is far more integrated into the global economy as the soviet union ever was. containing china now would necessarily look very difficult that a strategy of containing the soviet union in the 1950's. i think the analogy is useful in a couple of respects. it lacks for us that the united states and its allies need a comprehensive strategy for meeting the china channel. one that has economic,

geopolitical, diplomatic and ideological dimensions. it flags the fact that the united states needs a strategy that can be limited over the course of years or decades. it reminds us that the most important advantage the united states has in dealing with china just as its most important advantage of dealing with the soviet union is its networks of alliances and partnerships in the asia-pacific. if the united states cultivates those partnerships and alliances, it will do fine. if it neglects or divides them, it will find it harder to hold its own. haidi: an existential moment for these powers around the world struggling with the new normal. we will have to leave it there but great to have you with us, pal brent, professor of global affairs at johns hopkins. much more to come on daybreak asia. this is bloomberg. ♪

shery: we have the latest

numbers of japan's ppi. year-over-year growth of one poin 1.5%, missing estimates that it would gain 1.8%. they slow down from the previous month. month-to-month is a contraction of .6%. a bigger contraction than what was expected. we have oil prices falling at the same time as stronger yen in the month of december that went from 113 to 110. let's look at the market open in japan and south korea. how are we looking? sophie: along with the reaction to the ppi data, we will be gauging the response to the november core machine orders coming in unchanged. we are seeing nikkei futures up about 1/10 of 1%, perhaps tracking the gains we are seeing in u.s. stocks futures. also edging higher which could anticipate asian shares will gain. this while the yen is holding on to losses. this, while we consider

developments around brexit, we are seeing the pound after the moves we saw overnight. those are some of the markets we are keeping an eye on next up on bloomberg markets: asia. this is bloomberg. ♪

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haidi: welcome to daybreak asia. shery: we are live from bloomberg's global headquarters in new york. sophie: good morning from hong kong. we will bring you much of the news across asia. ♪ haidi: our top stories this wednesday -- theresa may says her brexit deal is not dead despite historic defeat in parliament, third worst result in 100 years. remove the carmaker regarding the court case in japan.

shery: a founder breaks years of silence. he denies his company helped china buy out. we could be setting up for a more positive day across markets in asia after a strong finish on wall street. sophie with a check of the markets. sophie: we are seeing a bit of a muted start in japan when it comes to the session. nikkei 225 up by 1/10 of 1%. we are seeing a mixed reaction to some of the data we got from japan along with the latest brexit developments. we will see whether the rally in asia may stall after the regional benchmark closed near a six-week high on tuesday. observers keeping a close eye on what a brexit plan b they look like. south korea seeing limited impact from brexit on the korean economy, with seeing a free-trade deal with the u.k. taking a look at the pound. it is unclear what the endgame is from here.

traders seem to be dismissing the possibility that theresa may will lose the confidence vote on wednesday. 8, reversinge 12 overnight losses as volatility is picking up. shery: let's discuss that brexit deal. theresa may saying she does not think her brexit agreement is dead, despite a landslide loss in parliament at the prospect of a confidence vote wednesday. her brexit deal suffering a landslide defeat by 230 votes, a margin far worse most had foreseen. in her address to the commons, she struck a defiant tone. >> it is clear the house does not support this deal. but tonight's vote tells us nothing about what it does support. nothing about how -- nothing about how or even if it intends to honor the decision the british people took in the referendum parliament decided to hold. shery: labor leader jeremy

corbyn quickly tabled a vote of no-confidence in may's government which will happen on wednesday. let's go live to london. our reporter has the latest. this result increases this feeling of political paralysis taking place in the u.k. and potentially kicks the can down the road. what are we expecting in the next few days? >> the first thing that is going to happen is wednesday, 7 p.m., they will be voting, jeremy corbyn and the labor leader brought to the floor which is a vote of no-confidence. it is very unlikely theresa may wouldn't be able to win this no-confidence vote. her tory party would have to rebel against her which would be a disaster. we are the heard from the irish lawmakers that they will support her. once that is done, she can get back to the negotiating table. this goes back to brussels. she can go back as early as thursday. the problem right now is the european union is really talking tough, playing hardball.

they say u.k. lawmakers need to make up their minds, they don't want to go back to the negotiating table. we are just 10 weeks out from where the u.k. is supposed to be leaving the european union, so many things can be done at this point. there is no clear direction on what that is. could we possibly see an extension of article 50? that is potentially one thing on the table . some are saying there is possibly a second referendum. if she loses this no-confidence vote, that could mean another general election. this is a problem right now. there really is no clarity. it is going to be day by day seeing what develops. shery: we saw the has them is a before the u.k. parliament voted, sending the pound lower by more than a percent. we are now seeing it bring back those declines. how are the u.k. assets and the pound react to this vote and why? annmarie: even the u.k. futures were up. i'm astonished by the pound and that is why i want to take you into the bloomberg terminal.

the pound versus the g10 basket, australian dollar, u.s. dollar, the yen -- the pound is rising against all of them. basically shrugging off this defeat. you say it is the biggest catastrophe for may in the parliament in a century, the pound does not think so. part of this is that theresa may is saying she is willing to work across party lines. that is signaling to many fx market who can potentially see a softer brexit which would be positive. i want to show you something else when we are talking about fx and where we see the pound going. bloomberg did this great survey with 11 banks. you can see we have a second referendum, that is when we can see sterling spike to 135. some of the other options is a deal passing the first time which did not happen. deal passes the second time. what would weaken the pound, bank analysts say, would be a general election. worst-case scenario, no deal at

1.14. 5. the likelihood of crashing out of the european union seems to be dancing after today's news, but i still need to stress that all options are really on the table after this massive defeat and dramatic evening in london. haidi: annmarie in london after what has been a dramatic day. let's go to the market impact. joining us is a portfolio manager. great to have you with us. what a day it has been. i want to throw out this chart looking essentially at this surprising strength, the v-shaped recovery that we saw in the pound as annmarie pointed out. there seems to be more options that would be more pound positive than negative. is this with the no-confidence notion that has been called and the vote that takes place wednesday evening, she is inspected to survive, but that takes a general election out of the picture -- is that creating greater certainty for fx traders

at this point? >> well, the two things to factor in here over the past several weeks, the possibility of the brexit going away altogether. and the moves in the pound reflect that. the second and more fundamental thing is pound is one of the cheaper currencies. it is very cheap. brexitt think a no deal can bring down the value. i do not think that is the basis at this point of time. we think potentially either a delay which could be made before the parliament elections in the eu or even a second referendum of the candidates in a game of multiple possibilities. haidi: a second referendum, how does that pose for how the pound trades? binay: a second referendum

should bring a bid to the pound because a second referendum could result, based on current voting intentions, on a no brexit situation in which the pound could go back 30% against the dollar. shery: we have heard by minister may today's say she did not want to run down the clock but that could be a good political strategy for all sides involved. if that is the case, what happens the markets and other u.k. assets until march 29? binay: you look at the u.k. assets, the british pound has a correlation with u.k. equity markets. if the pound does rise because of the possibility of no brexit happening, it should go down a bit. given the weakness in the pound, you can see u.k. equity markets reflect the global resource ifpanies and the global -- there is no deal, domestic

should catch which means smaller caps do better because there is no brexit. shery: with the pound falling, we have seen inflation gaining ground. at what point will the boe need to act? there is so much uncertainty it could also see the wait and see approach. binay: it is caught between inflation and worried about growth. the last meeting was pretty high. brexit torceive anticipate over the next 12 months, you should expect bank of india to go i which would support the pound against the dollar. haidi: this week has been all about brexit. what else are you watching? there could be different levels we are seeing with relationships and all of takes fracture around the globe. is trade the other issue? binay: it is a very big issue in asia because asia has been one

of the biggest beneficiaries of global trade. kong, singapore, hong korea -- they are all late to the export cycle. impact on bigger trading sentiments in asia than brexit does. binay, with us in hong kong. that's it to the first word news with stephen engle in hong kong. stephen: thank you. jpmorgan boss jamie dimon is warning the record government shutdown could drive u.s. growth 20. to 0. arguments over president trump's border wall keeps federal agencies closed. administration economists say the shutdown will shave more than 1/10 of are sent of growth every week. bcb president mario draghi says

the eurozone market is lower than expected due to uncertainty, warning against complacency. significant stimulus is still needed to help the drive towards table inflation. the bank's rank policy has support. it possesses the necessary rules to maintain the eurozone economy. renault is ready to remove carlos ghosn as ceo. the board has concluded the decision is urgent after he failed in his latest appeal for bail in tokyo. he has been in jail for eight weeks, accuse of financial misconduct. renault directors are respected to meet in the coming days. some reports say he will be replaced as chief executive regardless of the case against him. the founder of chinese tech company while way has broken a years long silence to dismiss allegations his company helped beijing buy out western nations. he denied helping officials espionage, saying he has no

regular contact with the government in beijing. he spoke with his daughter, facing fraud charges in canada, embroiled in the biggest crisis in the three decade existence. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts. i'm stephen engle. this is bloomberg. hauweistill ahead, billionaire founder rejecting accusations that his company helped aid chinese espionage efforts. taxy: next, china hopes cuts will help rev up the slowing economy. we will have the details next. this is bloomberg. ♪

haidi: this is daybreak asia. i'm haidi lun in new york. shery: i'm shery ahn the government of china is turning to tax cuts for the first line of defense against the slowing economy as credit data shows a gradual stimulus is having an impact. tom mackenzie joins us with the details. why the focus on tax cuts and how substantial could it be? tom: yeah, this seems to be in a version to repeating that stimulus-led investment growth we saw in 2008-2009. the view is starting to crystallize that the tax-cut strategy is front and center for chinese policymakers. we have seen some moves to increase bond issues for the government level but it is really about tax cuts. we have seen since about the middle of last year, a number of measures on that front in some of the bat cuts, including manufacturing.

we have had important into the chinese market three times. a personal income tax towards the end of last year. we've had the state council promising to cut about $30 billion worth of taxes to smaller and medium-sized enterprises. yesterday, we heard officials saying there will be even larger tax cuts to come. we are waiting for the details on those, but jpmorgan thinks it will come together to be worth about $300 billion u.s., about 1.2% of chinese gdp. this is an effort to support the consumer in china as well as private businesses. economists do say it will take longer to feedthrough into the real economy. a question mark on whether it will be enough given the week data we have seen. policymakers have taken some heart from that credit data. in fact, in the month of december, about expectations. total aggregate financing was above the forecast. that happened despite the fact that seems to be no sign the

policymakers are making any dramatic steps to move back from their squeeze on shadow banking. a balance from policymakers, which is somewhat positive but the data is negative. whether or not these tax-cut and liquidity is still to be seen to be enough. haidi: beijing hoping to target the ultrarich, but some of these chinese billionaires are already squirreling away to protect their wealth. what do we know? china's, we know that taxman has been given additional tools to track -- target the rich to pay for these tax cuts for those on lower incomes and small businesses. we have seen the four wealthy tycoons, billionaires, have transferred about $17 billion worth of -- into offshore family trusts. they're in mind -- bear in mind, total wealth in china rose to 24 trillion u.s. dollars in 2018.

among these four tycoons includes the chairman of -- the property developer. he transferred. he is one example. he transferred $4.5 billion into a family trust. ? into the extent to which china taxman will put in place these new tools he or she has being able to tax offshore companies and assets transferred from family members to family member. implementation will be key, but china's billionaires are taking steps to protect their wealth. a level of uncertainty over how much it can be targeted. uncertainty for china's billionaires and they are trying to take these steps with these offshore family trusts. shery: tom mackenzie, thank you so much for that with the latest on china. our top story today has been brexit. the ukip economy in limbo and politics in crisis after prime minister's may divorce deal was voted down. what is the likely market impact for asia, let's talk to the

portfolio manager with principal managers. china thatheard from they are going to implement new tax cuts. we have seen a lot of monetary easing from the pboc in targeted measures. what are we expecting from china from now on as we see not only the chinese economy, let the -- but the global economy starting to slow down, and will it be enough to avoid the high landing? binay: the critical difference this year versus 2018 is the change in chinese stance, both monetary and fiscal. pboc has clearly moved to a slightly easing bias in their policy. at the same time, the chinese government is trying fiscal measures to boost consumption which has slowed down. orders of last year into this year. the chinese leadership is actually worried. they want to keep growth at

6.5%. they are doing everything they can to do it. providing consumption boosts, tax cuts is a better way than doing an investment led recovery in the markets. the after which affects are fairly negative because a lot of money goes wasted in projects which do not generate enough cash flow as was the case in 2008-2009. we believe the current stance is better. it should cause a recovery in chinese and global growth in the second and third quarter of this year, which should result in decent gains for equity markets as opposed to 2018 which is fairly negative. shery: the chinese premier headed to washington at the end of the month. is there an upside risk coming from potential trade talks actually resulting in some positive outcomes for both the chinese and the u.s. economy? what would be outside risk be? we have seen the fed starting to

sound like they will cause this year. binay: yeah, the base case in the market is that they will do a deal. i believe there are more downside that they do not do a deal over the next 45-60 days. the deadline is the first of march. on the other hand, the fed is going slow. the markets expecting a cut by 2020. the fed's balance sheet replacement plan is under question. the end of theby first half of this year, the fed will announce something on their balance sheet. i don't think it is autopilot. i think the fed realizes they cannot tighten liquidity. therefore, it is for a more benign environment on financial conditions than it was in 2018. if any of these expectations do

not pan out, the risk is in the downside. if they do turn out with growth as expected, risk asset to do reasonably ok in 2019. haidi: does that include or exclude chinese domestic stocks? maybe in improvement in the numbers. is anything really going to drive a significant rebound when it comes to chinese stocks which has been languishing growth in terms of volumes and price levels? binay: yeah, the chinese stocks are largely driven by expectations of policy, both fiscal and monetary. as long as policy remains commodit accommodative, the stos should be ok. earnings growth expectations have been cut as well, which means the expectations are low from analysts. if the stimulus continues and you start to see growth, i think the markets have the potential to recover in relative terms bothse a terrible 2018

onshore and offshore chinese stocks were down in the dumps. shery: is volatility still a theme for 2019? yuan volatility still a theme for 2019? binay: volatility is late to what happens in trade, and linked to what happens to growth. growth and trade are linked. we feel that yuan should be stable if our expectations of growth comes true, which means you can see after the trade talks end, but not a major deadline as we saw last year. that should set a favorable backdrop. the movement of the dollar versus global currencies will leave important. we think the dollar might have peaked already and that should set the stage for a stable yuan, as i said earlier. shery: this chart on the bloomberg showing the other theme that was key in 2018.

that was just more tightening of financial conditions, as we saw fed rate hikes. will that be the case in 2019 as well? binay: we do not expect financial conditions to tighten dramatically this year. r prediction is that it will be stable or easing at some point in time. looking at emerging markets central banks, i don't expect many of them to hike interest rates like they did last year. china, india paused. indonesia, philippines will not hike unless you see a significant spike in oil prices which is not the base case for us. the u.s. is going on hold. ecb needs to get more growth. bank of japan will not move. a decent backdrop on financial conditions. that is positive for asian equity makers -- investors because asia is significantly influenced by movement and u.s.

treasury yields. in our case, they are stabilizing. shery: great to have you with us. global investors managing director and portfolio manager joining us from hong kong. plenty more to come on daybreak asia. this is bloomberg. ♪

shery: let's get a quick check on the business headlines. chief and its the officer is leaving but not due to internal ingredients. the departure has not been released for tim stone. he will continue in the role to search for a successor. snap expects the report earnings "slightly favorable to the top end of previous guidance." haidi: netflix gained after raising prices in the u.s. for the first time since 2017. the stock was listed by

anticipation of increasing revenue. the shares had already been up on a tear, up more than 40% since christmas eve after drifting lower from june record. much more to come. ♪

>> used by the 19 european union states and was produced in 1999.

among those marking was the former chief, his current successor mario draghi and the eu commission president. its firstposted trade deficit on record this year, hit by the trade war and a slump in the rupee. the trade gap was over $1 billion in december, bringing the for your deficit to $8.6 billion. the widest shortfall since 1975 when the bureau first released data. the emerging market rout saw it fall to a two-decade against the dollar. world debt is climbing $244 trillion, more than three times the size of the global economy. the institute of international finance says the debt to gdp ratio exceeded 318% in the third quarter of last year. that is a fraction below the record 320% seen in the same period in 2016.

financial sector indebtedness was $60 trillion, up 10% in a decade. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. haidi: we are looking at risks and asian markets. the chance of the world has a chance to react to the brexit vote. we are taking a look at the details. sophie: it is looking like a choppy start to the session. aussie shares looking at little change among real estate. gold miners are slipping at sydney as fully on prices are staying range bound. kicking off the worst start since 2013. aussie shares after the gauge of australian consumer confidence slumped the most in three years. it is saying that australia's

credit could be seeing a series of matches against india. that contributed to this sour mood for the month. the slower than expected pickup as producer prices. the nikkei 225 off by 7/10 of 1%. take a closer look at what is going on with the yen. we have a trading against the dollar. check out the korean yuan under pressure as officials say forced market volatility will be mostly watched. the impact of a no deal brexit will be limited. bondsare selling local and signs of slowing growth which has seen president moon urging to boost hiring an investment. shery: the billionaire founder of chinese huawei has broken his year-long silence of dismissing accusations his company helped beijing spy on western government.

stephen engle is taking a closer look at this. on the one hand, the praise president trump and was adamant about canada. stephen: this is becoming a mess, this whole issue with canada and china and the united states. the man you hear a lot about, but rarely hear from. when he speaks up, obviously, he is taking this quite seriously. he did praise donald trump. why poke the bear when his daughter is perhaps at his mercy? on bail in vancouver, though facing a possible extradition to the united states. donald trump has weighed in, much of this are written of others, saying this could be used as a bit of a way to move the ball forward on the trade deal. again, that is another issue for another day. basically, he said donald trump

is a great president and we will have to take a wait-and-see willach on whether trump intervene on the behalf of his daughter, also the chief financial officer of hauwei. he also denied hauwei aid to the chinese government espionage. he said he is a no regular contact with beijing. a couple of quotes we got from him from this group interview. he says i love my country, i support the communist party, but i will not do anything to harm the world. he also played down hauwei's role in the trade war and stressed cooperation with the united states and the trump administration. he says in his estimation, huaw ei is only a sesame seed in the trade conflict between china and the united states. we are hearing from the attorney general nominee of the united states, william barr. this is what he had to say about china. paramount economic

and military rival in the world. i think they are a very formidable because they take the long view. they have been stealing our technology and have been gradually building up their military power. and investing in new technologies. i think from a military standpoint, it is very disturbing how much progress they are making. stephen: tougher words from william barr. the china-canada relations. a death penalty, drug smuggling case, now going to appeal and canada has pleaded for clemency. what do we know? that is really playing into the tensions between the two countries. stephen: absolutely, this is getting more messy with robert seliger given the death

sentence. he is going to appeal. he appealed his initial 15 year drug sentence and that led to a one-day trial in the court room you are seeing here which ended up giving him the death sentence. justin trudeau has announced the move as arbitrary and urging canadian citizens to exercise a high degree of caution due to the risk of arbitrary enforcement of local laws. china in turn has issued a travel alert to canada as well. again, a couple of other canadians, supple more canadians are detained. inh profile cases also detention in china without access to lawyers. this -- china's foreign ministry spokeswoman has rejected the accusations of political motivation as malicious slander. and went as far to say that canada, by canada updating its

travel alert on china was like a thief shouting thief. it has become definitely a war of words, with great ramifications. haidi: our chief north asia correspondent stephen engle with the latest. let's turn to japan. ready to replace the chairman and ceo carlos ghosn with some board members concluding whether the conclusion is really made it. he remained in a tokyo jail for months now. we will bring in the media editor now. dave, what do we know about renault's intentions? we heard this week that they helped the board would come to the same conclusions. dave: this is a bit of a surprise in that the french government has said it does not intend to do this as long as ghosn at a prospect coming back and taking leadership of the company. this

probably more a reflection of the pressure that's on the company to solidify its leadership. you have to imagine if you're the interim c.e.o. for a corporation like this, you know, france's largest automaker, directed by the government, that there's intense pressure to exercise leadership. if your basis is interim, it may be harder to do that. they're looking to possibly solidify the position there. name someone with some more permanent -- permanence so they can get on with the business of making cars. >> of course we have seen mr. ghosn deny all of the charges against him. what will this do to his defense n japanese courts? >> the refusal to go along with nissan's out ofing from his position did signal that they had not seen the evidence. they had not seen anything that pointed directly to his guilt in

this case and to a conclusion that would lead to that. now that they are actually removing him, it could be read that way. i think given what they've said so far about this, it is clear that the pressure's on them to get the leadership in order to operate the car maker rather than to send a signal. i think that they've held out quite a while now against nissan's wishes and kept going in the position, sort of signaling they do support him. behind all this there's a lot of activity going on in france. a lot of political pressure on the government to show that it doesn't favor the global elite. if never was a poster child for the global elite, that would be ghosn. his high salary was already controversial. that puts pressure on the government to show that they're willing to take an even hand in a matter like this. and take care of it as an industrial matter rather than a political one. >> all right. media editor there coming to us. let's look at. so stories trending across the bloomberg universe.

speaking of nissan, over on tic toc, the bumpy road ahead for e car maker continues as its q.x. concept car fails to drive onstage at the detroit auto show debut. read about how trump is pushing the limits on unpaid workers by ordering thousands of federal employees back to work to monitor flights and food safety. and on the terminal stories on teresa may's massive brexit defeat, topping the most read list, of course. check out those stories trending on the bloomberg, online, and on the terminal. and in a moment, the leading threats to businesses. how to read the impact of brexit and more next. this is bloomberg. ♪

>> this is "daybreak asia." >> from brexit to volatile

markets. business is facing increasingly uncertain times. those two developments surprisingly popped up on a new survey of the biggest risks in 2019. we can discuss that with the gloible corporate and specialty board member. great to have you with us. let's start with uncertainty over brexit. is this all about just uncertainty over regulations and legislation, given that we don't know where these negotiations are going? >> good morning. thank you for having me with you this morning. i think the topic is broader than just legislation but i think that is a core concern. however, also if we look at some of our challenges facing our business colleagues and our clients in the u.k., it's how do you manage supply chain risk, how do you manage business interruption, how do you manage currency fluctuation. a whole host of challenges now facing u.k. business. >> it's interesting to see the business interruption, including the supply chain disruptions after past incidents in your top

risks for 2019. >> correct. so we have just completed our annual survey. -- 2,5,000 clients clients global -- 2,500 clients globally. we see that in u.k., the legislation and increased legislation is the number one risk facing u.k. clients. albeit it's the number four risk on the overall global survey. >> i know the supply chain disruptions is another thing that makes it into the list. that kind of plays into some of the other broader themes, right? if you're being pragmatic and looking at this, this is that is something could come through from the trade war, from brexit. >> yes. that's absolutely correct. we also see that through dialogue with our own clients in the u.k. i think the biggest risk around that scenario is that we have a global integrated economy. we have many u.k. businesses that are heavily dependent on

components or food ingredients coming through from overseas suppliers and of course there is now growing uncertainty as to whether we will have tariffs governing those imports, whether we will have delays at customs, whether we will have threats to supply chain management. a whole host of supply chain risk challenges now coming through as a result of this brexit fallout. >> then of course there is a chance that only some or a few of these risks or perhaps none of these risks materialize in the worst case scenario. is it also the overlaid risk which is that investors and companies and decision makers start making decisions based on a worst case scenario and how easily reversible are those decisions at the end of the day? >> i think that is a very real threat at this point in time. they're not so easily reversible. it takes a lot of time and energy to source new suppliers, to negotiate new contracts. and then once you're in that new legal framework, the contractual

framework, trying to u-turn out of that is not so easy. >> in this interconnected society, we are seeing business interruptions, including supply chain drippingses, taking many shapes and forms -- interruptions, taking many shapes and forms. what should business leaders be more aware of going into this year? >> i think we're seeing a new era of enterprise-wide risk management. where firms take a very holistic view of the threats and opportunities and challenges facing their business. and really ensure they have contingency plans in place. when we're in dialogue with our clients, we certainly speak to how do you diversify your overall risk? how do you ensure that you don't have too much business in the hands of one supplier, in the hands of one customer grouping, and to really think more holistically along the overall value chain. >> what about cyberincidents? we have seen the increasing hacking attacks all over the world. what does this risk mean for

businesses as they try to strategize for 2019? >> if we look at our risk barometer survey, cyber risk is now rated number two globally as the biggest threat facing businesses. we can see that $600 billion worth of cyber crime is facing the global economy. if we look at claims arising out of cyber threats, the average claim is $2 million which is actually double what we see for the average fire loss which comes in at approximately $1 million euros. so growing risk, growing dialogue, as firms seek to question their i.t. security, how do they manage that, how do they ensure they're resilient and how do they manage their overall reputational risk that may arise out of cyber hacking? >> concerns about climate change interestingly make it in there as well. is this concern about the impact of climate change or perhaps more concern about a lack of coherent policy? when it comes to grappling and dealing with climate change? >> i think for our clients it's

more about the impacts of climate change. and that manifests itself in natural catastrophe events. be typhoons here in asia, be it hurricanes in the u.s., be it albuquerques globally. and again -- earthquakes globaly. and again, clients are questioning, how do they ensure in their global business model that they're managing the risks that come from having business premises, having production, having suppliers in areas of the world that are really prone to natural catastrophe disasters, arising out of climate change. >> do these concerns, i mean, it's a very interesting report in terms of just the different types of risks that are facing businesses. but how often does that materialize into investable decisions being made by these companies? >> we see that our most sophisticated insurance purchasers are certainly managing that overall enterprise-wide risk management. it is feeding directly into how they value their assets, how they protect against that, and how they manage their overall global insurance program. so these are very, very real

risks and we're seeing increasing insurance purchase to mitigate those risks. >> and of course we have new technologies presenting really great opportunities in managing risk. what are some of the trends that we're seeing for this year? >> certainly we're seeing a lot of technology coming through in terms of how we manage our overall natural catastrophe risk. to ensure that we understand our hot spots and ensure that we understand asset accumulation in those hot spots. we're also seeing technology come to the market that has managed supply chain risk where we can help a client understand their primary risks when it comes to suppliers, their secondary, and then see the interconnectivity sitting behind the scenes of those groups of customers and how they themselves are interrelated. a lot of technology, a lot of a.i. and a lot of more sophisticated data coming to the fore, to help both companies, but also sophisticated clients really understand those risks much more deeply than in the past. >> thank you so much for joining

us. inead browne of allianz. bloomberg subscribers, go online, also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and the assets that you care about. this is bloomberg. ♪

>> this is "daybreak asia." >> a check of the latest headlines. united continental took off in late trade after fourth quarter earnings per share beat estimates. the company also beat on its adjusted full-year earnings forecast. the airline sees revenue for each fee flown a mile rising as much as 3% this quarter. although one percentage point of the estimate is at risk from the government shutdown. that's a more upbeat view than its rivals have. >> black stone group is close to raising $20 billion for its largest ever real estate fund. having only started officially marketing the fund towards the end of last year. blackstone is already the private equity's largest real estate investor. it plans to close the new fund in the first quarter of this year. for institutional investors. >> volkswagen and ford have announced their anticipated joint plan to build trucks and advance and work on electric cars. they aim to launch medium sized pickup trucks from 2022,

creating what they say will be the leading player in the seconder -- sector. the c.e.o. says the plan fits v.w.'s strategy of working with strong partners on specific topics, but he's ruling out any equity ties with ford. >> let's look at how markets are faring in asia today. we are seeing risk assets largely seeing modest declines. we are seeing aussie stocks staging a little bit of a turn-around. >> yeah. that is the case. you're going to see that sentiment carry through to the greater china open at 9:30. where we are keeping an eye on when it comes to that space, pharma stocks in focus here, as analysts remain hopeful. buy leading names as shares are undervalued. trading at historically low valuations while the operating environment is better. in the tech space, keeping an eye on this. a report that is hiring video game developers.

the co-founder of the company confirming the move, although down playing it, bearing in mind of course that china's government is more strictly monitoring the gaming sector and this week the company has posted several game-related job ads on chinese sites. also keep an eye on this. this has an undisclosed institutional investor has raised $278 million after finding replacements of the stock above midpoint of the market arrange. and taipei, this as the chip-related player -- [inaudible] -- falling 50%. >> the markets. we are seeing perhaps profit-taking here in asia today. let's look at how we're faring before we hand it over to bloomberg markets asia. markets trading at the moment. the nikkei 225 giving back some of yesterday's gains. we've seen declines about .7%. the cost trading pretty flat at the moment and the aussies turning it around a little bit. no doubt getting optimism from that china fiscal and tax cut

story. of course it has been a tumultuous few days when it comes to risk assets, with that development in the brexit vote today. >> yeah. we are seeing the japanese yen also gaining ground. not surprising we are seeing the down side on the nikkei now futures in singapore looking higher by more than 1%. in taiwan and malaysia, a little bit of pressure there. that's it from "day break asia." we look ahead to start of trade in shanghai. this is bloomberg. ♪

>> just on 9:00 a.m. in hong kong. this is bloomberg markets: china open. says her brexit deal is not that despite a historic defeat in parliament. ei on her brakes his silence. chinese tycoons are scrambling to protect their welfare. we're live in beijing.